📢 Harmony BTC/USDC Vaults: How Will They Actually Earn 30%+?
Let’s Break It Down👇
We're rolling out a BTC/USDC vault, built to help users earn yield while holding BTC exposure. But how does it really work? And how do we manage risk?
Inspired by great explainers from partners like @_hummingbot, here’s a breakdown of how these strategies function behind the scenes:
🧠How the Vault Generates Returns
1) Funding Rate Arbitrage: When funding rates are high on perp exchanges, LPs earn by passively taking the opposite side.
2) Range-Bound Liquidity Provision: We concentrate liquidity in high-volume price ranges to capture trading fees efficiently.
3) Hedged Positions: The vault uses hedging to stay close to delta-neutral. This helps reduce risk while compounding fees.
⚠️ What Risks We Monitor
1) Volatility Shocks: Sharp BTC moves can push positions out of range. We track volatility metrics and adjust ranges as needed.
2) Funding Flip Risk: If funding turns negative, the vault shifts to avoid staying in unprofitable positions.
3) Liquidity Concentration: We monitor slippage and on-chain volume to avoid trapping LPs in illiquid price zones.
🔍Why This Matters
Traditional funds already use strategies like this. Our goal is to bring them to DeFi in a way that’s simple, accessible, and transparent.
We're here to answer questions and would love your feedback. What would you like to see next — risk dashboards, yield calculators, or LP tutorials?
Let’s build DeFi that works.
đź’™ Harmony Team
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